Yahoo hires former PayPal head as its chief executive
For years, Yahoo Inc. has been stuck with the kind of cosmic curse that is all too painfully familiar to Scott Thompson, a die-hard Boston Red Sox fan.
Thompson, former head of PayPal, has stepped to the plate to become Yahoo’s fourth chief executive in less than five years. The Boston native said he’s bringing an underdog spirit to the tall task of reigniting innovation and growth at the onetime Internet powerhouse that faces rising competition for advertising dollars from rivals Google Inc. and Facebook.
“I’m personally convinced that the core assets, the core business assets, are stronger here at Yahoo than people believe,” Thompson told Wall Street analysts during a conference call Wednesday.
If that sounds like deja vu all over again, that’s because Yahoo has been trying to pull itself out of the same slump for years, relying on a rotating cast of characters. In early September, Yahoo fired Carol Bartz after 21/2 years because she couldn’t raise revenue and engineer the very turnaround that Thompson must now attempt.
Thompson, who said that he starts his day on the Yahoo website every morning “pretty religiously,” told analysts it’s too early to detail his vision for the company, saying he needs time to get up to speed and meet the executive team. Monday will be his first official day on the job.
But he did say that Yahoo has “world-class technology” and an untapped wealth of data about its users that it can draw on to offer better services to its users and more opportunities to its advertisers.
Thompson, 54, takes over Yahoo at a particularly fraught time for the company, which is in the midst of a board-level strategic review that has explored options such as selling parts or all of Yahoo and taking it private.
And, even as spending on online advertising has boomed, some advertisers haven’t increased spending on Yahoo even though it still has popular Web destinations, including Yahoo Mail and its sports content.
In a momentous blunder — much like the one that sent Babe Ruth from the Red Sox to the New York Yankees in 1919 — Yahoo’s tale of woe began in 2008 when it rejected an unsolicited takeover bid from Microsoft Corp. worth about $44 billion. That decision precipitated a dramatic fall from its perch as one of the Web’s top players, with its market value sliding to about $20 billion. Analysts said Thompson has his work cut out for him.
“There is no easy solution,” BGC Partners analyst Colin Gillis said.
For some, Thompson’s appointment came a bit out of left field. With a friendly style, button-down shirts, bushy mustache and thick Boston accent, he cuts an atypical figure in Silicon Valley. He’s also short on experience in the online advertising and media business. But his achievements at PayPal, the online and mobile payments unit of EBay Inc., commanded respect.
Thompson joined PayPal in 2005 as its chief technology officer after building Inovant, the technology arm of Visa Inc.
He took over as PayPal’s president three years later and, with a reputation for placing bold bets such as pushing for PayPal payments in retail stores, is credited with building it into EBay’s biggest moneymaker.
Investors say they’re hoping Thompson can figure out new ways to make money from Yahoo’s online audience of more than 700 million visitors a month. But like Bartz, Thompson is already facing questions over his lack of experience in online advertising.
“The nice thing with Yahoo that investors don’t appreciate is that it has a strong financial position and its global reach is enormous,” said Ryan Jacob, chairman and chief investment officer of Jacob Funds, which counts Yahoo as one of its major investments. “Yahoo’s real challenge is regaining its position as a leading-edge Internet media company.”
Yahoo Chairman Roy Bostock said Wednesday that Yahoo would push forward with a review of its strategy, which includes the possibility of unloading its valuable stakes in Asian Internet companies and selling a minority stake to private equity investors. He ruled out the possibility of taking Yahoo private.
Yahoo is still considering “a wide range of opportunities for the company’s business as well as specific investments or dispositions of assets,” Bostock said.
Yahoo’s board is exploring the sale of its entire stake in Yahoo Japan and most of its stake in Alibaba China for as much as $17 billion for both, according to published reports.
Jacob said he believed the plan to sell off those assets would move forward with Thompson at the helm.
“The disposition of the Asian assets will give Yahoo more options and buy them some time,” Jacob said.
As always, “execution will be key,” Macquarie Capital analyst Ben Schachter said.
“As much as we respect what Scott has done at PayPal,” he said, “Yahoo faces significant challenges in terms of brand identity, technology infrastructure, employee morale, competitive challenges, the transition to mobile.”
Yahoo shares fell 51 cents, or 3%, to $15.78 on Wednesday.
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